A cocktail of bullish headlines are pushing crude oil prices closer to 100 dollars per barrel, with geopolitics adding an upside risk premium to the energy market.
Escalating geopolitical tensions in Europe and the oil-rich Middle East boost the price of Brent beyond 91 dollars per barrel for the first time since 2014, with the front-month contract of WTI heading towards 90 dollars per barrel.
Tensions between Russia and Ukraine have challenged energy prices. Since Russia has been the world’s third-largest oil producer, just behind the USA and Saudi Arabia, with an annual average production of 11 million barrels per day.
In addition, natural gas and electricity prices have also soared to record highs since Russia has been the second-largest producer of dry natural gas in the world, and the largest gas supplier in Europe with primary clients being Germany, Italy, France, and Austria.
Russia is demanding that Ukraine should never be permitted to become a member of the NATO military alliance, with the US and its European allies warning of severe economic restrictions in the case of invasion.
Threats to the United Arab Emirates from Yemen’s Houthi movement added another geopolitical risk premium to oil prices, at a time where several OPEC members have been facing issues from producing at their quota levels.
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